[Thoughts on USRX Hybrid X2DSL Modem Marketing Strategy]
Bob,
I don't agree with some of your comments. Please don't construe
this as a personal attack, because none is intended. But think about
the following points, and don't hesitate to point out any flaws in my
reasoning:
1. <<* Where's the value in a 128k/256k announcement? Probably as a
last ditch effort to recover any revenues from a 56k modem with a very
short product life cycle.>>
Don't be so quick to write off competition from USRX for ADSL
modem business. The PC Week article mentioned that 128k/256k would be
one "option" called "ADSL Light." This at least *implies* that there
will be one or more other ADSL options for the ADSL part of the hybrid
X2DSL modem, presumably at greater speeds. It also again raises the
question of whether USRX will be able to design a "universal" modem
(i.e., if they can design a "hybrid" modem that runs 56Kbps X2 *and*
more than one DSL option, can they design one to run both CAP and DMT?
There would certainly seem to be some value in being able to market an
ADSL modem that could be advertised as usable with whatever "flavor"
ADSL your local phone company had decided to install, without
requiring the buyer to figure out if she needed a CAP, DMT, or [WDMT?]
version. More on the "universal" modem concept later, I'm still
trying to figure out if that's technically feasible).
As for the "short" product life cycle, when do you think 56Kbps
modem technology will be obsolete? I don't know when mass deployment
of ADSL will happen, but I don't think the 56Kbps life cycle will be
significantly shorter than the 28.8Kbps life cycle. The 28.8Kbps life
cycle wasn't very long, but USRX apparently made profits selling it.
But the key value of the hybrid modem, regardless of what ADSL
speed option it contains when first purchased, is that it will be
upgradeable by a simple software download. Now you may not believe
that a USRX hybrid modem will be upgradeable over the phone to a
higher ADSL speed, but such an upgrade would be consistent with the
current USRX marketing campaign for upgrades from 28.8Kbps modems to
the faster X2 technology. Some people complain that X2 technology
doesn't really give full 56Kbps speed, but I don't recall anyone
claiming that the downloadable software upgrade feature doesn't work.
The ease of upgrading from 56Kbps to ADSL is important. If you
currently had a modem that could be upgraded over the phone to ADSL
speed, wouldn't you be strongly tempted to upgrade in that fashion,
rather than going shopping for an entirely new modem? And even if
you personally wouldn't upgrade that way because of what you've
learned as an Amati investor, what percentage of future ADSL modem
buyers will be owners of Amati stock?
There also has been a lot of complaining here about how slow the
various phone companies are about mass deployment of ADSL. Isn't it
likely that for some period of time, in at least some parts of the
country, ADSL modems will be available to consumers and businesses
that want fast Internet connections, BEFORE the phone companies have
the central office equipment installed to handle the demand? That
seems to be analogous to what is happening with 56Kbps technology
right now. Some ISPs now offer 56Kbps Internet access, but USRX was
able to sell lower speed modems upgradeable to 56Kbps for months in
advance. How many owners of a 28.8Kbps upgradeable modem will buy an
entirely new 56Kflex modem from Motorola rather than making a phone
call to receive a free (or at least relatively inexpensive, depending
on date of original purchase) download of a software upgrade from
USRX?
The potential ADSL market is huge, so there will certainly be
many new customers in the market for their first ADSL modem after the
phone companies have mass deployed it. Amati will have a shot at all
of that business. But USRX's marketing strategy sure looks to me like
a rational attempt to "lock in" (at least from a convenience
standpoint) as many future ADSL customers as possible, by providing an
easy upgrade path to ADSL.
USRX didn't become the #1 modem seller by selling junk or being
stupid. There was a time when the most important question you could
ask when buying a modem was whether it was "Hayes compatible." Let's
hope Amati does half as well as USRX in taking market share from an
entrenched competitor.
2. <<Do you think 128/256k is going to win the desktop vs. 1.5mb
from ANY ADSL vendor?>>
Yes, during the time that the 1.5Mb modem is available from a
modem vendor, but 1.5 Mb transmission equipment has not been installed
by the local phone company. Some buyers will need the fastest
immediately available modem usable over their then current phone
lines. If that modem also provides an easy upgrade path to higher
future ADSL speeds, so much the better.
Hybrid modems may also have some limited continued use where
the modem buyer is initially too far from the telco central office to
get ADSL speed (although this would seem to be a small part of the
overall US market).
3. <<* TI can contract with anyone...Amati collects on the lisc.
agreement. If this is USRX's big ADSL Interop announcement then I
feel very good about Amati's decision to "make them pay" what is fair
... If I'm a USRX shareholder, I'd tell to kiss and make-up with Amati
and roll-out a product with a shelf life of more than a year...>>
As I speculated and pat mudge later posted that she confirmed,
TI is free to sell its DSP containing Amati DMT line code to anyone,
including its long time, high-volume customer, USRX. IF (and I stress
the IF), all of the proprietary technology necessary to implement ANSI
standard DMT is contained in the line code that Amati licensed TI to
install on the new TI DSP, then USRX is free not only to buy the TI
DSP, but to use the TI DSP to make and sell an ANSI-compliant DMT
modem. Unfortunately, I'm not an electrical engineer and cannot
assess whether all of Amati's intellectual property necessary to make
and use an ANSI-compliant DMT modem is incorporated in the "line code"
already licensed to TI. My guess is that 95% of the posters on this
thread, like me, don't have sufficient technical background to make
that assesment.
If I understood her post correctly, when pat mudge inquired about
the threat of competition from USRX, she said she was told that Amati
has patents on improved versions of DMT modems that were not licensed
to either TI or Motorola. Assuming for the moment that pat's source
was truthful, that she accurately relayed it, and that I understood
her point, that simply means that Amati can make and sell a DMT modem
that exceeds ANSI standards in some ways. That's an entirely
different issue than whether USRX, or any other buyer of the TI DSP
containing Amati's DMT line code, already has the right to make its
own basic, but ANSI-compliant, DMT based ADSL modem.
If anyone out there understands the technology well enough,
please explain why you think USRX and other modem makers need (or
don't need) Amati's permission to make a basic, but ANSI compliant,
DMT modem after they have bought the TI DSP containing Amati's DMT
line code. And as previously pointed out, standard setting bodies
like ANSI require the owner of any "standard" technology to make it
available for licensing to others. Even IF USRX needs more than the
TI DSP containing Amati's DMT line code to make an ANSI compliant ADSL
modem (it might not), Amati has no choice but to make such technology
available to USRX. The only question is the price of the license.
Thanks in advance to anyone who can shed some light on the technical
question!
Bozo T. Clown
If you make an investment decision based on a comment by some Bozo,
you have only yourself to blame! |
